Corporate Universities: An Emerging Threat To Graduate Business Education

When we look at the factors that most threaten U.S. higher education today, it is reasonable—even logical—to look within our institutions because there are so many dangers inside academia at this juncture in its history. It might sound alarmist to say so, but academia really is standing on a cliff.

First and foremost, the economics of higher education are no longer sustainable, neither for colleges and universities nor for the students who study there. Costs are exploding for institutions, and the burden of tuition and room and board is driving families and students into deep and sometimes unrecoverable debt.

As schools search for financial solutions to reduce or at least manage costs, they are faced with a myriad of equally destabilizing risks: new technologies that are redesigning the delivery of courses; a changing economy and job market; a soured opinion of the value of higher education (with compelling research to back this view up by scholars like Richard Arum); and states and a federal government reluctant to be partners in financing.

There is also a far less obvious but potentially more dangerous threat outside of academia. It is not, however, the for-profit colleges such as the University of Phoenix that have worried us for years, nibbling around the edges at our enrollments and threatening our monopoly. They are not a significant threat because they have, for the most part, adopted our model and with it our problems.

The challenge I see looming on the horizon is one that has been around for decades but only now appears to threaten a touchstone of professional schools in American academia – the accredited master’s degree in business.

The threat I speak of comes from corporations themselves, which are increasingly taking a DIY approach to graduate education. At first blush, it’s hard to see how corporate America’s interest in setting up training centers or “universities” of their own foretells a catastrophe for business schools. These corporate institutions have been around for decades, and they have been somewhat insular.

Two of the most famous and established examples are Hamburger University, created by McDonalds in 1962, and GE’s Crotonville. The inventively named Hamburger U has maintained a steady course of training since its formation, and Crotonville, launched in 1956, is the oldest corporate university in the nation.

Located in Ossining, New York, Crotonville, when it was launched, offered GE executives general management courses that lasted up to 13 weeks. Today courses are broken into three main buckets—leadership, subject-matter skills and business—and last up to three weeks.

Hamburger U operates out of its Elk Grove, Illinois, campus, and its mission is to train and develop talent for the global food giant. Nineteen full-time professors teach at the school, which has received college credit recommendations from the American Council on Education (ACE).

Both of these granddaddies of the corporate university movement were successful, in part, because they focused so exclusively and aggressively on the human resource needs of their own companies and industries.

The same might be said of the numerous other institutions that have popped up in recent years, although I feel they pose a greater threat today to higher education because they are a response to academia’s deficits. Many corporations are creating their own internal universities because they feel business schools have failed at training the managers and leaders needed to run their companies.

Institutions in the entertainment and technology fields get the most attention—Apple University and Pixar University—but there are examples outside of those fields that show the breadth of the appeal of the corporate university, such as Deloitte University and General Motors Institute.

What distinguishes these schools is they maintain a focus on corporate culture and history, while also recognizing the importance of training students in creativity, flexibility, innovation and adaptability.

Talk to any corporate leader and you’ll hear a story about the shortfalls of today’s MBA programs, especially in terms of the real-world needs of companies in a global marketplace. In recent years I have emphasized the need for—and demand for—a more broadly educated business student, one who is gifted with critical thinking and a global perspective and able to excel in this competitive environment.

In some cases, corporations may have already decided that graduate business education in America is too bloated and bureaucratic to compete effectively, and that only by establishing their own graduate and executive business programs can they find and mold the right employees to fill jobs and take the reins of leadership.

All that is standing in their way now is to crack the nut of accreditation. Academia has maintained a death grip on this area for decades and for good reason. It has allowed us to protect our fiefdom from the outsiders who threaten the status quo. We will not be able to sustain this position for very much longer, especially as portfolios of skills and experiences become as valued as graduate degrees or university executive programs. If corporations come to care more about skills and their own organizational culture than they do about the letters after an employee’s name, the corporate university model could become much more prominent.

It is a conundrum for business schools, and one that will only be solved by a dramatic redesign of graduate management programs, making them as flexible and agile as the students they must produce. When we consider all the problems plaguing higher education, and as we look for solutions to those problems, we need to consider our customers. What potential graduate business student wouldn’t be drawn to a new model of learning that not only promises useful skills but also guarantees a job and a good salary at the end of the process?

Many of us think that a business education is a worthy goal in its own right, and it certainly has been in the past. But if we’re not able to give our students training that leads to jobs then it’s possible our model of learning will not survive for very much longer. If we want to avoid that disappointing future, we have to recommit as business schools to giving our students the skills that not only enrich their lives but also match the demands of the evolving labor market.


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